BRISBANE, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Cutera, Inc. , a leading provider of laser and other light-based aesthetic systems for practitioners worldwide, today reported financial results for the third fiscal quarter ended September 30, 2005.
Key financial highlights for third quarter 2005, compared with third quarter 2004, are as follows:
-- Revenue increased by 49% from $12.7 million to $19.0 million -- Operating margins improved from 9% to 25% -- Earnings per diluted share climbed from $0.07 to $0.27 -- Cash generated by operations improved from $2.8 million to $6.3 million
Third quarter 2005 revenue was $19.0 million, representing a 49% increase from $12.7 million in revenue recorded in the third quarter of 2004. Net income for the third quarter of 2005 was $3.8 million, or $0.27 per diluted share, compared to net income of $877,000, or $0.07 per diluted share, reported in the same period last year. Cash generated by operations in the third quarter of 2005 was $6.3 million, compared with cash from operations of $2.8 million generated in the third quarter of 2004.
The Company's revenue for the nine months ended September 30, 2005 was $51.7 million, a 41% increase from $36.5 million in revenue recorded in the same period last year. Net income for the first nine months of 2005 was $8.0 million, or $0.58 per diluted share, compared to net income of $1.7 million, or $0.14 per diluted share, reported in the same period last year. Cash generated by operations in the first nine months of 2005 was $12.8 million, compared with cash from operations of $5.3 million generated in the first nine months of 2004.
Kevin Connors, Cutera's President and Chief Executive Officer, said, "We are pleased with our strong revenue growth, which we believe is outpacing the healthy growth in our sector. We are also experiencing significantly improved profitability due to the leveraging of our business model. Demand for our multi-application CoolGlide Xeo system, the Titan application, and the Solera platform, remains strong as customers continue to acquire our systems and upgrades to address the increasing consumer demand for non-invasive aesthetic procedures.
We remain committed to aggressively investing in our business to help us continue outpacing our industry's rapid growth rate. Specifically, we are focused on the following key initiatives, which are yielding measurable returns as proven by our third quarter results: (i) worldwide sales force expansion; (ii) new aesthetic applications and product introductions; and, (iii) marketing to the broad and expanding market of physicians outside of the traditional dermatology and plastic surgery physician specialties, including the emerging medi-spa market. The medi-spa market is comprised of physicians who offer aesthetic treatments in a spa environment."
Mr. Connors concluded, "In addition to the significant achievements of growing revenue and improved profitability, our balance sheet strengthened further in the third quarter of 2005, as we generated $6.3 million of cash from operations and ended that quarter with $82.2 million in cash and marketable securities - with no debt. This strong financial position, together with the fast paced growth of our Company, strategically positions Cutera as a leading global provider of light-based aesthetic systems."
Guidance
Management believes that for the fourth quarter of 2005, revenue will be approximately $22.0 million with earnings per diluted share of approximately $0.29. For full year 2005, management is raising revenue guidance to approximately $73.6 million, from $70 million. In addition, management is raising its earnings per diluted share guidance for the full year 2005 to $0.87, from $0.62. The projected increase in earnings per diluted share is primarily attributable to better than expected third quarter 2005 results and a strong outlook for the fourth quarter 2005.
Conference Call
Cutera, Inc. will host a conference call on November 1, 2005, at 2:00 p.m. PST (5:00 p.m. EST) to discuss its third quarter 2005 results. The earnings call will be broadcast live over the internet hosted at the Investor Relations section of the Company's website at http://www.cutera.com and will be archived online within one hour of the completion of the conference call. In addition, you may call 800-811-8824. Participating in the call will be Kevin Connors, President and Chief Executive Officer, and Ron Santilli, Chief Financial Officer.
A telephonic playback will be available from 5:00 p.m. PST on November 1, 2005 through 11:59 p.m. PST on November 15, 2005 by calling 888-203-1112. To access this playback, please enter pass code 4099698.
About Cutera, Inc.
Brisbane, California -based Cutera is a leading provider of laser and other light-based aesthetic systems to the professional aesthetic market. Since 1998, Cutera has been developing innovative, easy-to-use products that enable dermatologists, plastic surgeons, gynecologists, primary care physicians and other qualified practitioners to offer safe, effective and non- invasive aesthetic treatments to their patients. For more information, call 1- 888-4CUTERA or visit www.cutera.com
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, statements concerning Cutera's ability to broaden its product offerings and its target market, to expand its sales force, to generate increased demand and to increase its market share, as well as Cutera's financial guidance for the fourth quarter and fiscal year 2005, are forward-looking statements within the meaning of the Safe Harbor. Forward-Looking statements are based on management's current, preliminary expectations and are subject to risks and uncertainties, which may cause Cutera's actual results to differ materially from the statements contained herein. Cutera's third quarter financial results, as discussed in this release, are preliminary and unaudited, and subject to adjustment. Estimates for the fourth quarter of 2005 financial results are subject to a number of assumptions regarding the future operation of our business. Further information on potential risk factors that could affect Cutera's business and its financial results are detailed in its most recent 10-K and 10-Q as filed with the Securities and Exchange Commission. Undue reliance should not be placed on forward-looking statements, especially guidance on future financial performance, which speaks only as of the date they are made. Cutera undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date they were made, or to reflect the occurrence of unanticipated events.
CUTERA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) September 30, December 31, 2005 2004 Assets Current assets: Cash and cash equivalents $4,728 $7,070 Marketable investments 77,488 59,200 Accounts receivable, net 5,331 6,643 Inventory 5,000 3,004 Deferred tax asset 2,284 2,284 Other current assets 1,909 878 Total current assets 96,740 79,079 Property and equipment, net 1,044 1,071 Intangibles, net 502 399 Total assets $98,286 $80,549 Liabilities and Stockholders' Equity Liabilities: Accounts payable $1,625 $1,195 Accrued liabilities 8,553 8,194 Deferred revenue 1,427 1,171 Total current liabilities 11,605 10,560 Deferred rent 984 648 Deferred revenue, net of current portion 1,156 833 Non-current portion of deferred tax liability 60 52 Total liabilities 13,805 12,093 Stockholders' equity: Common stock 12 11 Additional paid-in capital 71,002 62,738 Deferred stock-based compensation (2,417) (2,226) Retained earnings 15,933 7,942 Other comprehensive loss (49) (9) Total stockholders' equity 84,481 68,456 Total liabilities and stockholders' equity $98,286 $80,549 CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Net revenue $18,950 $12,703 $51,667 $36,548 Cost of revenue(1) 4,746 3,408 13,642 10,454 Gross profit 14,204 9,295 38,025 26,094 Operating expenses: Sales and marketing 6,151 4,677 17,694 13,578 Research and development 1,275 979 3,692 2,985 General and administrative 1,621 2,171 5,819 6,151 Amortization of stock-based compensation(2) 433 317 1,100 954 Total operating expenses 9,480 8,144 28,305 23,668 Income from operations 4,724 1,151 9,720 2,426 Interest and other income, net 549 198 1,351 255 Income before income taxes 5,273 1,349 11,071 2,681 Provision for income taxes (1,472) (472) (3,080) (991) Net income $3,801 $877 $7,991 $1,690 Net income available to common shareholders used in basic earnings per share earnings per share $3,801 $877 $7,991 $1,394 Net income per share: Basic $0.33 $0.08 $0.70 $0.18 Diluted $0.27 $0.07 $0.58 $0.14 Weighted-average number of shares used in per share calculations: Basic 11,661 10,729 11,369 7,863 Diluted 13,924 13,085 13,681 11,922 (1) Cost of revenue includes amortization of stock-based compensation of: $40 $39 $102 $129 (2) Amortization of stock-based compensation is attributable to the following operating expense categories: Sales and marketing 71 63 160 211 Research and development 59 105 240 309 General and administrative 303 149 700 434 433 317 1,100 954 Total amortization of stock-based compensation $473 $356 $1,202 $1,083 CUTERA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Nine Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income $7,991 $1,690 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 503 380 Allowance for doubtful accounts (296) 102 Change in reserve for excess and obsolete inventory 434 95 Stock-based compensation 1,202 1,083 Change in deferred tax asset 8 (759) Tax benefits from stock based award activity 3,125 182 Loss on disposal of assets -- 104 Changes in assets and liabilities: Accounts receivable 1,608 1,172 Inventory (2,430) (965) Other current assets (1,031) (34) Accounts payable 430 16 Accrued liabilities 359 985 Deferred rent 336 536 Deferred revenue 579 714 Net cash provided by operating activities 12,818 5,301 Cash flows from investing activities: Acquisition of property and equipment (414) (652) Purchase of intangibles (165) -- Proceeds from sales of marketable investments 18,294 -- Proceeds from maturities of marketable investments 34,373 -- Purchase of short term investments, net (70,995) (6,055) Change in restricted cash -- 250 Net cash used in investing activities (18,907) (6,457) Cash flows from financing activities: Proceeds from exercise of stock options 3,747 441 Proceeds from issuance of common stock, net -- 46,336 Net cash provided by financing activities 3,747 46,777 Net (decrease) / increase in cash and cash equivalents (2,342) 45,621 Cash and cash equivalents at beginning of period 7,070 10,290 Cash and cash equivalents at end of period $4,728 $55,911 Supplemental disclosure of cash flow information: Change in deferred stock based compensation, net of terminations $1,393 $(175) Conversion of preferred stock to common stock $-- $7,372
Cutera, Inc.CONTACT: Ron Santilli, Chief Financial Officer of Cutera, Inc.,+1-415-657-5500; or John Mills, Investor Relations of Integrated CorporateRelations, Inc., +1-310-395-2215, or jmills@icrinc.com, for Cutera, Inc.
Web site: http://www.cutera.com/
